Oil drops above 1% over U.S.-China trade war

Oil Price Fundamental Weekly Forecast – Trade Deal News Supportive but Supply Worries Could Cap Gains

Oil Price Fundamental Weekly Forecast – Trade Deal News Supportive but Supply Worries Could Cap Gains

Mr Trump also said there had been incorrect reporting about United States willingness to lift tariffs as part of a "phase one" agreement, news of which had boosted markets.

The trade talks with China are moving along "very nicely", President Trump told reporters on Saturday.

Brent crude, the global benchmark, was up 47 cents at $62.65 a barrel by 1115 GMT, after falling as low as $61.90. This sent the oil market down on Monday, as participants fret about the implications for global trade, economic growth, and, as a result, global oil demand growth.

Adding further support, USA data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to November 8, traders said, citing market intelligence firm Genscape.

Oil prices fell more than one per cent on Monday amid concerns over the prospects of a trade deal between the United States and China, while worries about oversupply also weighed on the market.

Oil prices ended Tuesday little changed after paring gains of about 1% following a speech from U.S. President Donald Trump that offered few new details about Washington's trade talks with Beijing.

Trump also said there had been incorrect reporting about the U.S.'s willingness to lift tariffs as part of a "phase one" agreement, news of which had boosted markets, Reuters reported. President Donald Trump's speech in NY on Tuesday disappointed investors, giving little insight on how the impasse with Beijing will be resolved, and warning of higher tariffs if a deal can't be reached.

Futures dropped as much as 0.5% in NY after losing 0.8% over the previous two sessions.

Cushing inventories have grown for five weeks in a row, according to government data, up till its latest report in the week ending Nov 1. Over the longer-term, global oil demand will hit a plateau around 2030 as more efficient cars and electric vehicles usher in the end of the hydrocarbon era, the International Energy Agency said in a report released Wednesday.

Investors are concerned about excess supplies of crude, analysts said. OPEC and its partners will probably keep output steady when they meet next month as markets are on track to re-balance, according to Goldman Sachs Group Inc. and Trafigura Group Ltd.

"Oil costs are dampened by re-escalating trade uncertainties and a strengthening USA dollar", mentioned Margarat Yang, market analyst at CMC Markets in Singapore.

"A removal of the tariffs would be the quickest way to return the world to its pre-trade war economic momentum and shore up oil demand growth", said Vandana Hari, founder of Vanda Insights in Singapore.

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